Caesars Entertainment Operating Company, Inc. (CEOC
or the Company) today announced its objection to a notice of
default sent by a minority group of holders of one tranche of
second lien notes issued by the Company. The Company believes
that the claims in the notice are baseless and will defend
itself vigorously against any action taken by these creditors.
“We will not allow our company, our employees and the
communities in which we operate to be held hostage by a minority
of holders whose interests are contrary to the long-term health
of the Company,” said Gary Loveman, chairman and chief executive
officer of Caesars Entertainment Corporation (CEC).
The Company, its parent, CEC, and its private equity sponsors
have acted responsibly to improve performance through investment
in the business, capital structure management and operational
improvement. Over the past several years, the Company and its
affiliates have completed nearly 50 capital markets transactions
have been completed and more than $3 billion has been invested
to expand and upgrade the Caesars network.
Recent transactions, including the sale of assets to Caesars
Growth Partners, followed a rigorous, independent process which
garnered fair value for CEOC and provided it with liquidity
crucial to its business and capital structure plans. The process
included special committees comprised of independent directors
of CEC and Caesars Acquisition Company. Each committee received
independent legal and financial advice and fairness opinions
related to the transactions.
Also meritless is the holders' contention that CEC's previous
announcement regarding the termination of CEC's guarantee of the
holders' notes constitutes a default. As that announcement
indicated, pursuant to the terms of the indentures to which
these creditors agreed, the CEC guarantee terminated when CEOC
ceased to be a wholly owned subsidiary of CEC. The guarantee was
included in the indentures at CEC's request to allow the use of
consolidated financial statements, not to provide credit
support. CEC and CEOC have honored and will continue to honor
their obligations under their indentures and expect creditors to
do the same.
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